Automatic Clearing House (ACH) payments can be a convenient way to transfer funds electronically. However, their convenience does not mean they are entirely foolproof. Just like any other electronic payment, you run the risk of encountering fraud. Furthermore, a few simple mistakes can result in paying significantly more than you should. To avoid these pitfalls, ensure you are not making these mistakes during your ACH transfers.
Skipping the Notification Before Debiting Customers
If you’re a business that uses ACH to bill customers quarterly or annually, a notification can make things go a lot smoother. The problem with not notifying customers is that they can easily forget about your payment arrangement. When they see a random debit show up in their account, they may assume they did not authorize the transaction and block the payment from their bank. This means you will have to spend a significant amount of time and energy arguing to receive your payment.
Sending out a quick reminder beforehand can prevent this common ACH issue from arising. Emails are a popular method for notifying customers, but texts can be even more effective. This helps remind businesses that you will be debiting them soon, so they can prepare for the upcoming transfer.
Just Going With the Cheapest ACH Processing Service
When selecting their processing service, many businesses make the mistake of choosing the provider with the lowest price. This can actually end up costing you a lot of money in the long run. The issue is that some processors have hidden fees, limited funds availability, or inadequate technical support. If you don’t choose the best service for your needs, you may end up with unexpected expenses and frustrating delays.
Furthermore, some of the more affordable processors overlook basic security considerations. One of the most common ways businesses are compromised is through a scammer hacking into their third-party ACH processor. Even if you are not hacked, you can still incur significant fees and fines for failing to comply with PCI standards.
Ultimately, if you want to save money and have your processing go smoothly, it is essential to conduct thorough research. Actually, consider how various processing services work before choosing the first one that offers a low quote.
Not Staying Up to Date on the Rules
The ACH transferring system is closely monitored by various organizations. To protect both businesses and consumers, NACHA has established a comprehensive set of rules governing ACH transfers. Although any reputable ACH processing company will be aware of and follow these rules, it is still essential to stay up to date.
The NACHA regulations and guidelines are constantly changing. For example, a major change recently was reducing the threshold for returns. Previously, NACHA allowed unauthorized returns for up to 1% of the total transaction number. Now, the threshold is just 0.5%. If companies are not aware of these changes, they may end up triggering a frustrating inquiry and potentially incurring fines.
Forgetting to Use Bank Account Verification
A surprisingly high number of businesses make the mistake of assuming that everything is fine as long as their ACH processing looks official. However, when you ignore the account-verification process, you can end up with a major hassle. You should never start delivering goods or services until you can actually verify your ACH payment through your bank. Making this mistake can often result in significant financial losses.
Taking the time to verify an ACH payment is actually quite simple. Typically, you simply need to visit the financial institution that holds the account and verify the information through them. Depending on the ACH company you select, this can even be an automatic part of accepting any payments. With proper ACH automation and account verification, you can make sure all your accounts are legitimate.
Not Being Aware of Common ACH Fraud Methods
ACH is one of the most secure ways to send money electronically, but this does not mean it is entirely foolproof. Like any other financial transaction, there are always ways for scammers to exploit a company. The best way to defend against fraud is simply being aware of it. This helps you recognize potential fraud and stop it in its tracks.
One of the most common fraud methods is scammers sending emails or texts that try to trick you into revealing sensitive information. Always make sure you are communicating with your actual business partners and ACH transfer service through verified communication channels. Another popular method scammers use is hacking computers, so it is essential to prepare with antivirus and malware programs. Remember that there is always a risk of an involved party behaving unethically, so it is essential to regularly review transactions for suspicious activity.
Relying on ACH Returns to Handle Accounting Mistakes
When you are part of a busy company, taking the time to double- and triple-check every number can get frustrating. However annoying it may be, skipping proper verification is a bad idea. There are various simple administrative errors, such as transposed numbers, that can cause issues with your ACH transfer. Of course, one of the perks of using ACH is that you can request a return when mistakes occur. However, these still contribute to your returned transaction rate, so they can count against you.
Therefore, it is essential that you still follow good accounting practices. Do not rely on ACH to fix everything that goes wrong. Instead, you still need to take the time to double-check payments and perform internal audits. Even if you have ACH automation, it is a good idea to manually review your payment system periodically.
Not Keeping Transaction Records for Later Examination
Once your ACH payment goes through, you probably won’t think about it again. However, old ACH payments actually need to be examined frequently. It is very common for merchants and regulatory bodies to request prior authorizations for ACH transfers. If you do not have them, you can end up paying fines or getting into trouble. Many companies forget to retain these records, or they archive them in a manner that is not easily searchable.
This problem is fairly easy to solve. All you need to do is set up proper methods for storing proof of authorization. After each transaction, archive your authorizations in a location where individual authorizations can be easily located and retrieved. This will save you a significant amount of time in the future and prevent you from encountering problems.
So, have you ever done any of these things before? If you want to avoid making any big mistakes while processing ACH payments, we can help. Checkissuing.com provides an easy and reliable way of getting your payments to the right people. To learn more about our services, get in touch with us today.
Last updated: September 2025